Bloomberg News

PG&E Exploited Lax Oversight Before Gas Blast, NTSB Finds

August 30, 2011

(Updates with information on welds, management in second paragraph.)

Aug. 30 (Bloomberg) -- PG&E Corp. exploited lax regulatory oversight and used flawed materials in a natural-gas pipeline, leading to a 2010 California blast that killed eight people and destroyed 38 homes, a U.S. safety board concluded.

PG&E’s inadequate quality controls in 1956, when the line in San Bruno was built, allowed construction of a substandard, poorly welded pipeline, and coupled with deficient company management led to the explosion last year, the National Transportation Safety Board said.

The panel, which analyzes accidents in pipelines carrying hazardous materials, adopted the final report and recommendations at a meeting today in Washington.

“We know that this tragedy began years ago with PG&E’s 1956 installation of a woefully inadequate pipe, ” Deborah Hersman, the board chairman, said during the meeting. PG&E is “a company that exploited weaknesses in a lax system of oversight.”

PG&E, which on Aug. 15 said a defective weld probably caused the pipeline rupture, is planning to spend $2.2 billion to replace 186 miles (299 kilometers) of pipeline and conduct strength tests on 783 miles of pipe. The company will inspect 234 miles and retrofit 199 miles of pipe to accommodate inspections, according to an Aug. 26 regulatory filing.

“We have already taken aggressive action,” Brian Swanson, a PG&E spokesman, said today in Washington. “We appreciate all the hard work the NTSB has done on this investigation and we will adopt and implement their recommendations into our emergency response.”

Recommendations Released

The board today recommended testing all gas transmission lines constructed before 1970 and previously excluded from safety-inspection requirements introduced at the time. NTSB also told PG&E to expedite automatic shutoff-valve installation and revise work and emergency response procedures.

The company didn’t have a response coordination center to gather, assess and act on information about the accident, NTSB investigators told the board today. PG&E also lacked equipment to isolate a short section of line and quickly stop the flow of natural gas, Bob Trainor, a member of the investigative team, told the board. Gas that escaped from the pipe was sufficient to heat 1,200 houses for a year, Hersman said.

The 95 minutes that PG&E needed to stop the flow of gas “was excessive,” the board decided, and could have been reduced, had the automatic shut-off valves or remote-controlled valves been installed, according to its report.

Drugs, Sewer Line

While drug use wasn’t a reason for the accident, the company failed to conduct appropriate alcohol and drug tests after the incident, the board concluded.

The installation in 2008 of a sewer line by San Bruno didn’t contribute to the rupture, according to the board.

PG&E failed to supply the board with information about the origin of parts used in the pipe and didn’t inform investigators about a leak more than two decades earlier on the same pipeline until 10 months into the probe, Hersman said today.

“For government to do its job -- safeguard the public -- it cannot trust alone, it must verify,” Hersman said today, quoting President Ronald Reagan. “And where the trust is not merited, make sure the penalty is high. Because, when there’s an accident like the one in San Bruno, it is too late.”

--Editors: Steve Geimann, Larry Liebert

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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